Several months ago I met a woman at a meeting who told me she worked because she had to, I should have let this comment slide by, but I didn't. Instead I interrogated her mercilessly until I was able to get her to admit she worked because she wanted to. She did not appreciate my attempt to enlighten, and I did regret doing it after the conversation was all over.
Now if you have concluded that I think mothers who work outside the home are subhuman, you are wrong. I just get a little off kilter when middle-income families do not assume responsibility for their choices.
This woman, it turns out, was a teacher, and she genuinely enriched by her job. She just had resolved feelings about her role as a parent.
Families choose a two-income lifestyle for very good reasons. In the lowest-income groups it is usually an economic necessity. I know of many cases when the wife works because her husband's job lacks security or sufficient benefits. Usually the purpose of the second income is to elevate the standard of living.
All these reasons can be valid reasons. It would be clearly stupid of me to nitpick the choices of working moms when I am indebted to many. Some wonderful schoolteachers and delivery room nurses come to mind.
This lengthy prelude is, admittedly, literary clutter because this article is not about values. My biggest concern about the traditional two-income structure is that it can be extremely inefficient. You only have to study the figures.
To demonstrate this I will us a family of 4 with two incomes of $25,000 and $15,000. Neither spouse is self-employed and both have equal benefits. The most complicated factor to figure is the bigger tax bite. I am presuming my couple does not itemize. A $15,000 income loses about 12% to federal and state income tax, and social security. A $25,000 income has about 18% withheld. But as these two incomes combine, our couple moves into a higher tax bracket. A $40,000 income has about 22% withheld. In reality what this means is that the $15,000 loses 27% to the tax bite. To determine this I figured the couple's taxes with a $40,000 income and a $25,000 income. The difference is then subtracted from the $15,000 income.
$40,000 income pays $8,638
$25,000 income pays $4,516
Additional taxes = $4,122
When the difference is subtracted from $16,000, the net is $10,878.
My couple has two children in daycare at a cost of $120.00 per week. After factoring in the child care tax deduction, the income drops to $5,838 annually. Transportation, hair care, and a professional wardrobe can further impact this, bringing the net income well below $4,000.
Many families with two incomes are able to economize, but the reality is that most do not. If you are calculating the net value of the second income, ask yourself these questions:
How much could we save by spending more time shopping for better prices on the purchase of household goods?
Could we eliminate services we currently buy because of a lack of time, such as home maintenance and renovation, tax preparation, house cleaning, tutoring, etc?
How much could be saved by writing letters instead of making long-distance phone calls?
How much could we save on clothing by yard sales, watching sales, sewing, and repairing clothing?
How much could we save by using cloth diapers and hanging laundry?
If wood heat is a factor, how much could we save by 100% wood use and providing some labor?
In addition to the endless ways to save money with more free time, families with lower incomes qualify for special benefits. When you calculate the net value of your second income, work out your taxes both ways. State taxes and individual deductions will vary.
If you decide you want to scale back to one income, you must be sure you are willing to actually economize in the ways you factored in.
If you are single or newly married and wish to achieve a single income lifestyle, be aware that it requires aggressive planning. It is not a matter of luck. Many double-income families who believe they work because they have to are in reality paying for past choices.
If you both love your jobs, great; but if you would like to work less or leave your job altogether, and evening with a calculator may turn up a pleasant surprise.
